Comments on: Full disclosure: the Promise and Perils of Transparency: Book review http://clubtroppo.com.au/2008/04/07/full-disclosure-the-promise-and-perils-of-transparency-book-review/ Fri, 05 Dec 2008 07:35:35 +0000 http://wordpress.org/?v=2.6.5 By: Nicholas Gruen http://clubtroppo.com.au/2008/04/07/full-disclosure-the-promise-and-perils-of-transparency-book-review/#comment-258794 Nicholas Gruen Mon, 07 Apr 2008 12:44:01 +0000 http://clubtroppo.com.au/2008/04/07/full-disclosure-the-promise-and-perils-of-transparency-book-review/#comment-258794 There are oodles of examples. Standards generally are generated by way of co-operative effort in the private sector. The mortgage industry produced a methodology for reporting the 'true' cost of mortgages which involved all regular fees amortised over seven years. It was called the AAPR. The government came in and regulated for a new standard and stuffed it up - with a methodology that requires amortisation over the term of the loan - which is stupid from a number of respects, not least that loans are refinanced on average within about five years. But that having been said, governments, so long as they're well motivated, can often improve the situation by promoting integrity in such measures. There are oodles of examples.

Standards generally are generated by way of co-operative effort in the private sector.

The mortgage industry produced a methodology for reporting the ‘true’ cost of mortgages which involved all regular fees amortised over seven years. It was called the AAPR. The government came in and regulated for a new standard and stuffed it up - with a methodology that requires amortisation over the term of the loan - which is stupid from a number of respects, not least that loans are refinanced on average within about five years.

But that having been said, governments, so long as they’re well motivated, can often improve the situation by promoting integrity in such measures.

]]> By: swio http://clubtroppo.com.au/2008/04/07/full-disclosure-the-promise-and-perils-of-transparency-book-review/#comment-258789 swio Mon, 07 Apr 2008 12:28:46 +0000 http://clubtroppo.com.au/2008/04/07/full-disclosure-the-promise-and-perils-of-transparency-book-review/#comment-258789 <i>"While the emergence of a standard requires a kind of collective action, it need not necessarily be government regulation. Governments or indeed other social leaders might agitate for the best firms to develop an auditable standard against which to voluntarily report. That would often place pressure on other firms to report similarly, helping nurture the emergence of the standard and driving the kind of product improvements that occurred in Los Angeles’ restaurants."</i> Are there any examples of this? The only one I can think of that works are satisfaction ratings on ebay. If non-government information policies only work very rarely then perhaps its not very relevant and their lack of mention of it is justified. Another example is the Heart Foundation but from what I have learnt about heart health I would regard that as an example of a market incentives producing a perverse outcome and an example of why non-government forces might not be able to produce these standards. “While the emergence of a standard requires a kind of collective action, it need not necessarily be government regulation. Governments or indeed other social leaders might agitate for the best firms to develop an auditable standard against which to voluntarily report. That would often place pressure on other firms to report similarly, helping nurture the emergence of the standard and driving the kind of product improvements that occurred in Los Angeles’ restaurants.”

Are there any examples of this? The only one I can think of that works are satisfaction ratings on ebay. If non-government information policies only work very rarely then perhaps its not very relevant and their lack of mention of it is justified. Another example is the Heart Foundation but from what I have learnt about heart health I would regard that as an example of a market incentives producing a perverse outcome and an example of why non-government forces might not be able to produce these standards.

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